This Q&A will focus on how to set the proper road bike saddle height. What is said here generally applies to mountain biking as well, but the fit demands and characteristics are slightly different depending on the intended type of mountain bike riding. For now, on with setting your road bike seat height.
There have been many formulae concocted over the years to approximate the best saddle height for an arbitrary bike rider. I'll focus on 3 of the leading ideas here:
The Lemond Formula - I must start with this technique because it's my favorite. It's the only one based on empirical data collection; the other two methods derive from basic physiological principles. In the 1970's, Greg Lemond's coaches collected data from 100's of professional cyclists to determine what physical attributes were most predictive of the riders' saddle heights. After performing regression analysis on the array of physical variables, one popped out as the most highly predictive: the ratio of inseam length to the measurement of center of bottom bracket to top center of saddle. Put another way, it's a multiplier - and the magic number is 0.883.
To set your saddle height by the Lemond Method, do the following. With your shoes and socks off, stand straight with your back against a wall. Jam a book between your legs, as a saddle would support you. Now have someone measure from the floor to the top of the book (or do it yourself if you somehow can!). This is your inseam measurement for the purpose of the Lemond fitting. Whatever that number is - let's say 90cm - multiply that by 0.883 - which in our example would give 90cm x 0.883 =~ 79.5cm. Now, measure from the center of your bike's bottom bracket to what you visually estimate as the top center of your saddle, and this should be 79.5cm in length. When I perform this measurement, I generally follow the seatpost as a visual guide, and then adjust the measuring tape slightly toward the nose of the saddle to establish the approximate center of the saddle.
25 Degree Knee Angle Technique - Using a goniometer, a bike fit specialist (or your bike buddy!) will measure your knee angle from the hip, through the knee, and to the ankle bone. These measurement spots are not entirely precise: look up the Holmes measurement guidelines for precise physiological points. Generally, the knee angle measurement is considered safe at 30 degrees, but according to statements by the bike fit professionals, bike riders often end up with a knee angle measurement close to 25 degrees.
The 109 Degrees Method - This method is very similar to the Lemond method, except that instead of measuring from the center of the bottom bracket, one measures from a pedal spindle (or both) when it is at the 6 o'clock position. Start by measuring your inseam length, as before with the Lemond formula. Then multiply the result by 1.09 (which is 109%). Going back to our previous example, with a 90cm inseam, you'd calculate a height of 90cm x 1.09 = 98.1cm. This method dates back to 1967, when it was formulated and tested on many bike setups. One thing that must be taken into account with this method is the crank arm lengths - there if fully 1cm difference between 165mm and 175mm cranks, which would correspond with 43cm and 61cm bike frame sizes in all likelihood. What this indicates is that for shorter cranks, it may be right to start with 110 degrees, while for longer cranks, one would start with 108 degrees.